MANILA - The global outsourcing industry may face a "profit squeeze" over the next 7 years, as developed countries like the United States struggle to recover from local offshoots of the global economic slowdown, such as job losses and a weak dollar.

In a presentation at the 2009 International Outsourcing Summit on Tuesday, DPC Data Inc. chief executive officer Peter Schmitt said the US, in particular, would be hard-pressed to keep jobs in the country, with the number of jobless Americans projected to hit 9.4 million by year-end.

"If the US starts to create 2.5 million jobs per year starting January 2010, it would take until August 2017 to erase that jobs deficit. This signifies a dampening effect, reducing the cost benefits of offshoring jobs," Schmitt said.

His firm provides outsourced services, including custom data management, document services, electronic document delivery, and systems design and software development services. It also provides securities-related data products and services to financial institutions.

Schmitt added that the weakness in the US dollar was also a disadvantage to offshoring destinations like India, the Philippines and China, as the purchasing power provided by source companies becomes "considerably less."

"It makes other alternatives more attractive, like hiring people locally. The road's going to be rocky in the near-term," he said.

Business Processing Association of the Philippines president Oscar Sanez acknowledged the challenges presented by Schmitt, but clarified that the benefits of outsourcing continue to outweigh risks in the near-term.

"We cannot be blind to the fact that the US may limit jobs offshore to protect their employment. But there's a limit to restriction. A lot of companies still have to move jobs offshore just to survive, and avoid a bigger job loss if they actually close shop," Sanez explalined.

Stakeholders present in the Manila event also gave their sugestions on how to ensure sustainable growth in the outsourcing industry such as diversifying services, particularly non-voice services, and enforcing prudence on tax incentives for BPO firms. - By Michelle Orosa, ABS-CBN News